The Role and Value of the Global Distribution Systems in Travel Distribution

Transcription

1 The Role and Value of the Global Distribution Systems in Travel Distribution February 8, 2010 Moderator: Presenters: AtS Art Sackler Douglas Quinby Executive Director, Interactive Senior Director, Research, PhoCusWright Travel Services Association Bob Offutt Senior Technology Analyst and Editorial Director, Innovation Edition, PhoCusWright 1

2 The Role and Value of the Global Distribution ib ti Systems in Travel Distribution ib ti February 8, 2010 To view the recorded presentation, please click here. Note: If you download the Webinar, you will need a Webex player. If you do not have one installed, please download the player here: 2

3 The Interactive Travel Services Association (ITSA), whose membership comprises Global Distribution Systems and Online Travel Companies, promotes consumer choice, access, confidence, protection and information in the rapidly growing world of online travel. ITSA seeks to develop consensus among industry, consumer organizations and policy makers on issues related to consumer use of the Internet t to meet their needs. PhoCusWright is the travel industry research authority on how travelers, suppliers and intermediaries connect. 3

4 The Role and Value of the Global Distribution Systems in Travel Distribution A complimentary white paper from PhoCusWright and the Interaction Travel Services Association Download the report at: com 4

5 Agenda Introduction to the Global Distribution Systems GDS Role by Region & Segment Region: U.S. and Europe Segment: air and hotel GDS Role by Channel & Sector: Channel: online and traditional travel agencies Sector: leisure and corporate travel Key Trends Shaping Travel Distribution: Focus on Merchandizing GDS Outlook and Q&A 5

6 The Role and Value of the Global Distribution Systems in Travel Distribution Methodology PhoCusWright s U.S. Online Travel Overview, Eighth Edition PhoCusWright s European Online Travel Overview, Fourth Edition Analysis of proprietary GDS data provided by Amadeus, Sabre and Travelport: U.S. and European point of sale (original EU 15 plus Norway, Switzerland) Transactions (segments) and retail value ($/ ) Air, hotel and car rental (tour, cruise, other excluded) 6

7 Introduction to the Global Distribution Systems 7

8 What Do Travelers See When They Shop? Suppliers: Thousands Retail Travel Intermediaries $137B in U.S. in 2008? Possible Products: Billions Source: The Role and Value of the GDSs in Travel Distribution, January 2010; PhoCusWright Inc. 8

9 The Travel Distribution Chain s Quiet Giant: The Global Distribution Systems (GDSs) Providing retail access to pricing, availability and reservations across thousands of suppliers Source: The Role and Value of the GDSs in Travel Distribution, January 2010; PhoCusWright Inc. 9

10 Just How Many Suppliers, Retailers and Reservations? Supply Retail Distribution Airlines: 550+ Hotels: 90,000+ Car Rental Locations: 30, GDSs Travel Agencies: 163,000 worldwide Agent End Users: 490,000 Possible Product Offers: Billions More than 1.1 billion transactions in 2008; $268 billion in global supplier revenue Source: The Role and Value of the GDSs in Travel Distribution, January 2010; PhoCusWright Inc. 10

11 GDS Role by Region & Segment 11

12 GDSs Process More Than One-Third and One-Fifth of All Travel Sold in the U.S. and Europe, Respectively U.S. 1 and European 2 Total Travel Markets (Gross Bookings) & GDS Share, $B GDS Total U.S. Travel Market B GDS Total Europe Total Europe % 36% 35% % 23% 21% Total U.S. travel market = relevant revenues from U.S. airlines, hotels, car rental companies, tour operators, cruise lines and rail. 2. European travel market includes the EU15 plus Norway and Switzerland Source: The Role and Value of the GDSs in Travel Distribution, January 2010; PhoCusWright Inc. 12

13 GDSs Process Nearly Two-Thirds of Air Travel in the U.S. and Just Under Half in Europe U.S. and European Total Air 1 Markets (Gross Bookings) & GDS Share, $B GDS Total U.S. Airline Market B GDS Air Europe Total Air Europe % 65% 64% % 60 51% 47% Airline passenger revenues Source: The Role and Value of the GDSs in Travel Distribution, January 2010; PhoCusWright Inc. 13

14 GDSs Play a Much Smaller Role in Lodging U.S. and European Total Hotel Room Revenue & GDS Share, $B GDS All Hotel Room Revenue B GDS Hotel Europe Total Hotel Europe % 12% 12% % 4% 4% Source: The Role and Value of the GDSs in Travel Distribution, January 2010; PhoCusWright Inc. 14

15 GDS Role by Channel & Sector 15

16 What Do Travelers Want When They Shop? More information and options Cross-supplier shopping and comparison Lower prices And more travelers usually shop via intermediaries Lodging 28% 33% OnlineTravel Agency Air Travel 34% 38% Supplier Web Site Question: Please indicate which method you USUALLY use to purchase each type of travel component? Base: U.S. travelers (n=1,990) Source: PhoCusWright s Consumer Travel Report Part One: Behavioral Trends, April 2009; PhoCusWright Inc. 16

17 Travel Agencies Online and Traditional Represent Half of All Travel Sales U.S. Travel Market Gross Bookings and Share by OTAs, Travel Agencies and Supplier Direct, Travel Agency Online Travel Agency Total Direct US$B % % % Source: The Role and Value of the GDSs in Travel Distribution, January 2010; PhoCusWright Inc. 17

18 Total U.S. and European Travel Markets 1 and Retail Value of GDS Transactions, 2008 Total Travel Gross Bookings and GDS Share by OTAs, Travel Agencies and All Intermediaries in the U.S. Travel Market, GDS Share Gross Bookings US$B 80 75% % % 98.7 OTA Travel Agency All Intermediaries Source: The Role and Value of the GDSs in Travel Distribution, January 2010; PhoCusWright Inc. 18

19 Average Travel Agency Transaction Value Significantly Higher than Average OTA Transaction Average Airfare and Hotel/Car Transaction* Value for OTAs and Travel Agencies in the U.S., (2008) OTA Travel Agency $684 $321 $363 $114 $172 $286 Air Hotel/Car * Combined average value of hotel and/or rental car transactions, where a transaction equals a hotel or car rental booking regardless of the number of room nights, days or guests/passengers. Source: The Role and Value of the GDSs in Travel Distribution, January 2010; PhoCusWright Inc. 19

20 Intermediaries Online and Offline Rely on GDSs for Travel Product Rates, Availability and Booking Online Travel Agency & Traditional Travel Agency Sales & GDS Share, 2008 (US$B) GDS Share Gross Bookings % Leisure (mostly) % Corporate (mostly) OTA Travel Agency Source: The Role and Value of the GDSs in Travel Distribution, January 2010; PhoCusWright Inc. 20

21 Key Trends Shaping Travel Distribution: Focus on Merchandizing i 21

22 The Role and Value of the Global Distribution Systems in Travel Distribution examines Key Issues Shaping Travel Distribution 1. Supplier direct sales growth 2. Content fragmentation and the GDS goal of full content 3. Evolving economic models and pay-for-content 4. Optional services / ancillary fees: the future impact on pricing transparency 22

23 Air Content Distribution System 23

24 Airlines want to move from this: To this 24

25 Potential ti Value to the Airlines (Just checked bags) Source: IdeaWorks Press Release, January 20,

26 Can the Distribution System Keep Up with the New Airline Content? 26

27 What are Alternatives for the Distribution Channel? Ignore the new content but Share shift to airlines as points of sale could go direct for access Provision the new Content Financial incentive e (who pays?) Issue: can the distribution channel keep up with the airlines? Point of Sale (PoS) flexibility Good news: GDS supplied PoSs can be centrally modified Issue: other PoSs, Including OTAs need to redesign their shopping path. Financial incentive? Issue: back office systems need to be able to handle the new content t 27

28 The Challenge for Airlines? Transforming from seat-sellers to product marketers Engaging the customer through continuous marketing The bowtie effect dictates willingness to shop/buy for different products at different times. May require a mobile strategy. Rewriting internal systems to handle the new content Establishing procedures to deliver prepaid items 28

29 Key Trends Shaping Travel Distribution: Focus on Merchandizing i 29

30 Summary: The GDSs more than 1.1 billion transactions, $268 billion in global supplier revenue in 2008 half a million travel agents worldwide one-third of the total U.S. travel market in 2008 one-fifth of the total European travel market in 2008 nearly three-quarters of all travel intermediary sales in U.S. in

31 Outlook: The GDSs Positives Recessionary environment favors online travel agencies Corporate travel management trend toward bringing more spend under management, within policy Risks Airline optional services Supplier-stimulated channel conflict: withholding content, pay for content Direct / alternative connectivity Challenges Technology innovation Commercial adaptation 31

32 Q&A Douglas Quinby Twitter: Douglas_Quinby Bob Offutt Twitter: BobOffutt 32